Increasing wages will stop recovery

Increasing wages will stop recovery

ISME, Wednesday 4th May, 2016.

• Ireland still an expensive location in which to do business.
• Need for strong government to withstand inevitable union wage pressure.

ISME, the Irish Small and Medium Enterprises Association, at the release of the Monthly Unemployment figures from the CSO today (4th May), called on the new administration to put all business costs at the top of their agenda in order to achieve full employment. The Association drew attention to the fact that Ireland’s economy is described as ‘high cost, rising slowly’, and our consumer prices remain over 20% above the euro area average.

The Monthly Unemployment figures for April confirm that 183,700 people are still signing on the dole, a reduction of 3,700 in the month. The standardised unemployment rate is 8.4%.

Commenting on the figures, ISME CEO, Mark Fielding, said, “As all sectors of our economy are interlinked, increasing high business costs lead to higher cost of living, which in turn leads to wage demands, in a cycle that eventually kills the economy. The Government and the private sector have a duty to manage the cost base and drive efficiency”.

“The signals of the start of a vicious circle are evident in the many trade unions’ astronomical wage claims which government, the largest single employer, must defend. Wages are by far the largest percentage of business costs. Despite all the propaganda from the left, Ireland’s wage profile is still out of line with competitor countries and has been growing faster than the EU 28 in the last 2 years, increases must be curtailed.”

The Association called on the new Administration to:
• Stand firm on pay demands and any resultant industrial action.
• Reduce government influenced business costs to below the EU average.
• Encourage entrepreneurs through the tax system.
• Ensure real measurable access to credit for viable SMEs.
• Outsource more state sector services to SMEs.
• Reform the social welfare system to make it more profitable to work.
• Attack the scourge of ever-increasing black economy activity.

“The country needs a strong government to withstand the inevitable industrial unrest threatened by the unions, especially those in the public sector. The recent fluctuation of the euro vis a vis sterling shows how vulnerable the economy is to external factors and once again demonstrates the need to drive productivity as a sustainable defence to a more negative external environment”, concluded Fielding.